Global safe assets

Pierre-Olivier Gourinchas and Olivier Jeanne

No 399, BIS Working Papers from Bank for International Settlements

Abstract: Will the world run out of 'safe assets' and what would be the consequences on global financial stability? We argue that in a world with competing private stores of value, the global economic system tends to favor the riskiest ones. Privately produced stores of value cannot provide sufficient insurance against global shocks. Only public safe assets may, if appropriately supported by monetary policy. We draw some implications for the global financial system.

Keywords: safe assets; dollar; euro; liquidity trap; government debt crisis (search for similar items in EconPapers)
Pages: 68 pages
Date: 2012-12
New Economics Papers: this item is included in nep-ban
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Citations: View citations in EconPapers (58)

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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:399

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